McMahon Clarke has made a formal submission to Treasury's review of the regulatory framework for managed investment schemes (MISs). This review may ultimately herald a new MIS regime and significantly impact the domestic investment landscape.

SOME QUESTIONS

We have previously written about the Australian government tasking Treasury to review the regulatory framework governing MISs in our article Major overhaul on the horizon for managed investment schemes.

In August 2023, Treasury published a consultation paper which asked industry for submissions on 24 questions as part of this review. The questions covered a range of topics, including the following:

  1. Should the financial thresholds for the product value test and individual wealth test be increased? If so, to what value and why?
  2. Should certain assets be excluded when determining an individual's net assets for the purposes of the individual wealth test? If so, which assets and why?
  3. In relation to rights to withdraw from a registered scheme—
    1. Is the definition of liquid assets appropriate? If not, how should liquid assets be defined?
    2. Are any changes required to the procedure for withdrawal from a scheme? If so, what changes and why?

Submissions closed on 29 September 2023.

SOME ANSWERS

The answers to these questions (and others posed by Treasury) and any subsequent reform could have a material impact on the funds management industry. For example, if the financial thresholds for the relevant wholesale client tests are materially increased this may substantially reduce the pool of potential investors that may invest in wholesale funds, which would impact the success of wholesale fund offerings in the future. Also, if the definition of 'liquid assets' is revised, it may impact the ability for retail property fund managers to design and offer flexible withdrawal mechanisms to their investors.

OUR SUBMISSION

As market leaders in the Real Estate and Funds Management industries, McMahon Clarke is keenly following this review. We were fortunate to have the benefit of a private roundtable session with Treasury to discuss the review, the consultation being undertaken, and our views on reform. You can read our formal submission to Treasury here.

WHAT'S NEXT?

The findings of the review will ultimately be presented to Government in early 2024. In the meantime, please contact partners Elliott Stumm and Emma Donaghue or a member of our Funds Management team if you would like to discuss our submission or the review, including how it is relevant to your business.

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